UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 10-Q/A
___________________

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

Commission file number: 0-15476

EMERALD MEDICAL APPLICATIONS CORP.
(Exact Name Of Registrant As Specified In Its Charter)

Delaware	68-0080601
(State of Incorporation)	(I.R.S. Employer Identification No.)
7 Imber Street, Petach Tivka, Israel	4951141
(Address of Principal Executive Offices)	(ZIP Code)

Registrant's Telephone Number, Including Area Code: +(972) 3-744-4505

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.

Large accelerated filer ¨ Accelerated filer ¨ Non-Accelerated filer ¨ Smaller reporting company x

On August 26, 2016, the Registrant had 19,505,711 shares of common stock outstanding.

TABLE OF CONTENTS

Item	Description	Page
	PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS		3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS		17
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		20
ITEM 4.	CONTROLS AND PROCEDURES		20
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		20
ITEM 1A.	RISK FACTORS		20
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		20
ITEM 3.	DEFAULT UPON SENIOR SECURITIES		21
ITEM 4.	MINE SAFETY DISCLOSURE		21
ITEM 5.	OTHER INFORMATION		21
ITEM 6.	EXHIBITS		21

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents

Balance Sheets - June 30, 2016 (Unaudited) and December 31, 2015	3
Statements of Operations - Three and Six Months Ended June 30, 2016 and 2015 (Unaudited)	4
Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2016 and 2015 (Unaudited)	5
Statements of Cash Flows - Six Months Ended June 30, 2016 and 2015 (Unaudited)	6
Notes to Unaudited Interim Financial Statements	7

 

Emerald Medical Applications Corp.
Balance Sheets
As of June 30, 2016 (Unaudited) and December 31, 2015
Back to Table of Contents
	June 30, 2016 (Unaudited)		December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	274,759	$	115,449
Other receivable		8,212		25,797
Total current assets		282,971		141,246
Fixed assets, net
Fixed assets, net of accumulated depreciation of $10,751 and $6,536, respectively		17,735		21,120
Total assets	$	300,706	$	162,366
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities	$	48,204	$	90,705
Employee payable		22,786		25,612
Employee payable - related party		3,081		3,480
Accrued interest payable		21,887		19,285
Short-term notes payable		186,336		119,974
Convertible note payable, default		29,719		-
Convertible note payable, net of discount of $412,628 and $0, respectively		222,377		29,719
Total current liabilities		534,390		288,775
Total liabilities		534,390		288,775
Stockholders' equity (deficit)
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued.		-		-
Common stock, $0.0001 par value; 490,000,000 shares authorized;
19,474,461 and 15,325,889 shares issued and outstanding at June 30, 2016 and December 31, 2015		1,948		1,533
Accumulated other comprehensive income		(24,178)		(19,337)
Additional paid-in capital		11,738,066		8,752,711
Accumulated deficit		(11,949,520)		(8,861,316)
Total stockholders' deficit		(233,684)		(126,409)
Total liabilities and stockholders' equity (deficit)	$	300,706	$	162,366
The accompanying notes are an integral part of these financial statements.

Emerald Medical Applications Corp.
Statements of Operations
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Back to Table of Contents
		Three months		Three months		Six months		Six months
		ended		ended		ended		ended
		June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Revenues	$	-	$	-	$	-	$	-
Expenses:
Research and development		(192,002)		(237,095)		(295,350)		(247,400)
General and administrative expenses		(969,214)		(5,570)		(2,768,736)		(174,391)
Total operating expenses		(1,161,218)		(242,665)		(3,064,086)		(421,791)
Loss from operations		(1,161,218)		(242,665)		(3,064,086)		(421,791)
Other income (expense):
Interest expense		(14,128)		(4,346)		(21,887)		(11,829)
Change in fair value of derivative		-		-		-		367
Depreciation and amortization expense		(47,718)		-		(51,665)		-
Other income (expenses)		28,587		-		28,587		-
Gain/(loss) from foreign currency		6,503		(4,110)		20,847		1,808
Financial income (expense)		(26,756)		(8,456)		(24,118)		(9,654)
Provision for income taxes		-		-		-		-
Net loss	$	(1,187,974)	$	(251,121)	$	(3,088,204)	$	(431,445)
Basic and diluted (net loss per share)	$	(0.06)	$	(1.18)	$	(0.17)	$	(2.03)
Weighted average shares outstanding - basic and diluted		18,890,670		213,001		18,121,314		213,001
The accompanying notes are an integral part of these financial statements.

Emerald Medical Applications Corp.
Statements of Comprehensive Income (Loss)
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Back to Table of Contents
		Three months		Three months		Six months		Six months
		ended		ended		ended		ended
		June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Net loss	$	(1,187,974)	$	(251,121)	$	(3,088,204)	$	(431,445)
Change in unrealized foreign currency translation gain (loss)		(3)		(15,771)		(4,841)		(25,550)
Total comprehensive loss	$	(1,187,977)	$	(266,892)	$	(3,093,045)	$	(456,995)
The accompanying notes are an integral part of these financial statements.

Emerald Medical Applications Corp.
Statements of Cash Flows
For the Six Months Ended June 30, 2016 and 2015
(Unaudited)
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	Six months		Six months
	ended		ended
	June 30, 2016		June 30, 2015
Operating Activities:
Net loss	$	(3,088,204)	$	(431,445)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation expense		8,293		1,878
Amortization of debt discount		43,373		4,399
Change in fair value of derivative liabilities		-		(367)
Shares issued for services		2,074,736		-
Options issued for services		455,032		-
Increase (decrease) in cash resulting from change in:
Due from related party		-		(6,443)
Decrease (increase) in other receivable		17,585		(25,689)
(Decrease) increase in accounts payable		(1,777)		(2,577)
(Decrease) increase in accounts payable - related party		-		1,087
Employee payable		-		23,800
(Decrease) increase in other current liabilities		-		14,202
(Decrease) increase in accrued expenses		(45,779)		7,430
Net cash used in operating activities	$	(536,741)	$	(413,725)
Investing Activities:
Cash paid for fixed assets	$	(474)	$	25,317
Net cash provided by investing activities	$	(474)	$	25,317
Financing Activities:
Borrowings on debt	$	735,913	$	531,798
Principal payments on debt		(34,547)		-
Net cash provided by financing activities	$	701,366	$	531,798
Foreign currency adjustment		(4,841)		(25,550)
Net increase (decrease) in cash		159,310		67,206
Cash and cash equivalents - beginning of period		115,449		14,411
Cash and cash equivalents - end of period	$	274,759	$	81,617
Non-cash transactions:
BCF due to convertible note payable	$	456,000	$	-
Cashless conversion of class B warrants	$	193	$	-
The accompanying notes are an integral part of these financial statements.

Emerald Medical Applications Corp
Notes to Unaudited Interim Financial Statements
June 30, 2016
Back to Table of Contents

Note 1. The Company

Organizational Background

Emerald Medical Applications Corp. ("the Company") (f/k/a Zaxis International Inc.) was incorporated in Ohio in 1989, it's fiscal year end is December 31st. On August 25, 1995, The Company merged with a subsidiary of The InFerGene Company ("InFerGene") and InFerGene changed its name to The Company International Inc. InFerGene was incorporated in California in 1984 and subsequently changed its domicile in connection with the merger into The Company to Delaware in 1985. Operations ceased operations in 2002. In November 2002, the Company and its subsidiaries filed a petition for bankruptcy in the U.S. Bankruptcy Court Northern District of Ohio. On October 13, 2004, the Company emerged from bankruptcy.

On July 14, 2015 the closing of the Share Exchange Agreement was held (the "Closing") and as a result, Emerald Medical Applications Ltd. became a wholly-owned subsidiary of the Registrant. Pursuant to the Closing of the Share Exchange Agreement, the Company issued 5,474,545 shares of its common stock, par value $0.0001 (the "Shares" or "Common Stock") to Lior Wayn, Emerald's CEO and the sole holder of Emerald Medical Applications Ltd.'s ordinary Shares, representing 40.58% of the company's 13,489,905 outstanding Shares, in exchange for 100% of Emerald Medical Applications Ltd.'s ordinary Shares.

Subsequently to the Closing Mr. Lior Wayn has been appointed as the Company's CEO, and has been granted considerable influence on the appointment of new directors thereby creating a new management structure for the company replacing the old management. Additionally Mr. Wayn is to receive additional shares in the future contingent on the Company achieving commercial milestone. Thus the new management, headed by Mr. Wayn, is considered to be in control of more than 50% of the company and with the ability to make all management decisions.

Emerald is a company organized under the laws of the State of Israel on February 17, 2010. Emerald is digital health Startup Company engaged in the development, sale and service of imaging solutions utilizing its proprietary DermaCompare software that it developed for use in derma imaging and analytics ("DermaCompare"). Emerald believes that its proprietary DermaCompare software represents an advancement in skin cancer screening that should enable physicians to more readily identify and monitor changes in their patients' skin characteristics.

Emerald's DermaCompare solution allows dermatologists and other medical care professionals, using a set of 25 total body photography ("TBP"), to capture sets of skin lesion images with, among other devices, digital cameras, camera-equipped smartphones or tablets. These images are then transmitted online and are remotely analyzed by professionals using our DermaCompare software.

Emerald's sales and marketing plan is to sell licenses for our imaging software to: NHSs, HMOs, health insurance companies, hospitals and medical clinics through distributers, health care channel partners or directly through independent salespersons and/or web purchase to dermatologists and other physicians (GPs) that we expect to purchase licenses based on the number of potential numbers of patients.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred operating losses since inception. Further, as of June 30, 2016, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company elected December 31 as its fiscal year end.

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. There were no cash equivalents as of June 30, 2016 and December 31, 2015.

Other Receivables

The company treats VAT refunds claimed resulting from excess VAT paid over VAT received as other receivables, amount shown as other receivables as of June 30, 2016 was $8,212.

Currency Translation and other Comprehensive Income

Balance sheet items are translated using all current translation method for self-contained foreign operations (where functional currency = foreign currency) whereby assets and liabilities are translated using the exchange rate on the date of the balance sheet. It translates revenues, expenses, and net income using the average exchange rate during the period. The foreign exchange adjustment that results from applying the all-current method appears in other comprehensive income, a separate shareholders' equity account, and does not affect net income each period.

Property and Equipment

New property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Valuation of Long-Lived Assets

We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

Stock Based Compensation

Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Company's common stock, the estimated volatility of the Company's common stock, the exercise price of the warrants and the risk free interest rate.

Accounting For Obligations And Instruments Potentially To Be Settled In The Company's Own Stock:

We account for obligations and instruments potentially to be settled in the Company's stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company's own stock.

Fair Value Measurements

The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company values its derivative instruments related to embedded conversion features and warrants from the issuance of convertible debentures in accordance with the Level 3 guidelines. For the six-month period ended June 30, 2016 and the twelve month period ending December 31, 2015, the following table reconciles the beginning and ending balances for financial instruments that are recognized at fair value in these consolidated financial statements. The fair value of embedded conversion features that have floating conversion features and tainted common stock equivalents (warrants and convertible debt) are estimated using a Binomial Lattice model. The key inputs to this valuation model as of December 31, 2015, were: Volatility of 143.9% for the six-month period ended June 30, 2016 and 132.4% for the twelve months period ending December 31, 2015, inherent term of instruments equal to the remaining contractual term, quoted closing stock prices on valuation dates, and various settlement scenarios and probability percentages summing to 100%.

Fair Value Measurements at June 30, 2016

Level 3 - Derivative liabilities from:	Balance at June 30, 2016		New Issuances		Settlements		Change in Fair Value
Convertible Note	$	-	$	-	$	-		-

Fair Value Measurements at December 31, 2015

Level 3 - Derivative liabilities from:	Balance at December 31, 2015		New Issuances		Extinguishment		Change in Fair Value
Convertible Note	$	-	$	-	$	(20,532)		-

Changes in the unobservable input values would likely cause material changes in the fair value of the Company's Level 3 financial instruments. The significant unobservable input used in the fair value measurement is the estimation for probability percentages assigned to future expected settlement possibilities. A significant increase (decrease) in this distribution of percentages would result in a higher (lower) fair value measurement.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2016 and December 31, 2015:

Fair Value Measurements at June 30, 2016

	Level 3
Assets
Total Assets	$	-
Liabilities
Derivative liability	$	-
Total Liabilities	$	-

Fair Value Measurements at December 31, 2015

		Level 3
Assets
Total Assets	$	-
Liabilities
Derivative liability	$	-
Total Liabilities	$	-

The fair values of our debts are deemed to approximate book value, and are considered Level 2 inputs as defined by ASC Topic 820-10-35.

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the six months ended June 30, 2016 or the year ended December 31, 2015.

The Company had no other assets or liabilities valued at fair value on a recurring or non-recurring basis as of June 30, 2016 or December 31, 2015.

Earnings per Common Share

We compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred January 1, 2012.

Income Taxes

We have adopted FASB ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.

Uncertain Tax Positions

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of FASB ASC 740-10, Accounting for Uncertain Income Tax Positions, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2011. We are not under examination by any jurisdiction for any tax year. At June 30, 2016 we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FIN 48.

Recent Accounting Pronouncements

In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805) ("ASU 2015-16"). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years beginning December 15, 2015. The adoption of ASU 2015-016 is not expected to have a material effect on the Company's consolidated financial statements.

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period.

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30) ("ASU 2015-03"), which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption of ASU 2015-03 on its balance sheets

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of June 30, 2016, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Note 2. Stockholders' Equity.

On January 8, 2015 the shareholders approved a resolution to increase the authorized common shares from 100,000,000 to 490,000,000 shares. All other provisions of the common shares remain unchanged. Also on that date, the Company declared a reverse split of common stock at the ration of 1:4. The stock split was effective January 8, 2015 for holders of record as of that date. Except as otherwise noted, all share, option and warrant numbers have been restated to give retroactive effect to this split. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred at January 1, 2012.

Recent Issuances of Common Stock

Between January 15, 2015 and March 15, 2015, the Company sold a total of 2,052,000 units for cash consideration of $780,000 at a price of $0.40 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $351,433 for the common stock and $428,567 for the class A warrants. The warrants were valued using the Black-Scholes model with 153% volatility and discount rates ranging between 0.44% to 0.7%. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger.

Between April 1, 2015 and June 29, 2015, the Company sold a total of 1,012,500 units for cash consideration of $405,000 at a price of $0.40 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $158,123 for the common stock and $246,877 for the class A warrants. The warrants were valued using the Black-Scholes model with volatility ranging between163% - 177% and discount rates ranging between 0.54% to 0.71%. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger.

Between July 1, 2015 and September 30, 2015, the Company sold a total of 140,000 units for cash consideration of $15,000 at price of $0.107 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $4,294 for the common stock and $10,706 for the class A warrants. The warrants were valued using the Black-Scholes model with volatility of 153% and discount rates of 0.61%. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger.

Between July 1, 2015 and September 30, 2015, the Company sold a total of 862,500 units for cash consideration of $345,000 at price of $0.40 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $118,415 for the common stock and $226,585 for the class A warrants. The warrants were valued using the Black-Scholes model with volatility ranging between 153% - 182% and discount rates ranging between 0.54% to 0.71%. Of these units $65,000 were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger and $280,000 cash was received subsequent to Closing of the reverse merger.

On July 16, 2015 and August 6, 2015, the company issue 517,900 shares to one service provider and 100,000 shares to two service providers, respectively, for services valued at a total value of $617,900, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com.

On July 16, 2015, 5 Emerald debt holders in amount of $87,910 converted their debt into 274,719 units at a conversion price of $0.32 per unit, each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The Loss on Settlement of Debt recorded was $678,027.

On July 14, 2015 the Company issued Emerald's CEO and founder, Lior Wayn, 5,474,545 shares as per the share purchase agreement valued at $877,380, valued on the date of grant for the price of common stock.

On July 16, 2015 consultants were issued 2,500,000 Class B Warrants exercisable for a two-year period to acquire one (1) share of Common Stock at a price of $0.40 per share; The fair value of these warrants is $2,199,507. The warrants were valued using the Black-Scholes model with volatility of 182% and discount rate of 0.67%. The Class B warrants are fully vested and were accordingly included in expenses as stock based compensation.

On July 16, 2015 consultants were issued 2,536,247 Class C Warrants exercisable for a 90 day period, commencing 90 days after the effective date of this Registration Statement, at an exercise price of $0.40 to acquire one (1) share of Common Stock and one (1) Class A Warrant at an exercise price of $0.80. The fair value of these warrants is $3,143,581. The warrants were valued using the Black-Scholes model with volatility of 182% and discount rate of 0.67%. The Class C warrants are fully vested and were accordingly included in expenses as stock based compensation.

On November 17, 2015 the Company sold 250,000 units for cash consideration of $100,000 at price of $0.40 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $41,304 for the common stock and $58,696 for the class A warrants. The warrants were valued using the Black-Scholes model with volatility ranging between 149% and discount rate of 0.50%. These warrants are fully vested and the fair value and included as stock based compensation on the prior year retained earnings.

Between November 5, 2015 and November 16, 2015 the company issue 268,084 shares to three service provider and for services valued at a total value of $268,084, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com.

On October 1, 2015, the Company granted a total of 534,400 stock options (the "Options") to three company employees. The options vest over 5 quarters and are exercisable at prices ranging from $0.01 to $0.40 per Share. The options were valued using the Black-Scholes model with 149% volatility and 0.67% discount rate for a total value of $528,857. Of this amount, $397,547 was expensed as of December 31, 2015 and $42,394 as of March 31, 2016. An additional $42,394 was expensed during the three-month period ended June 30, 2016.

On January 26, 2016 and March 17, 2016, the Company issued 125,000 shares to one service provider and 50,000 shares to two service providers, respectively, for services valued at a total value of $251,250, arrived at using the stock price on date of grant of $1.75 and $0.65, respectively, per Nasdaq.com.

On February 18, 2016, the Company issued 1,195,000 shares to three acting directors, for services valued at a total value of $1,194,403, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com.

On January 26, 2016, consultants that were previously issued 2,500,000 Class B Warrants exercisable for a two-year period to acquire one (1) share of Common Stock at a price of $0.40 per share, exercised the warrants on a cashless basis resulting in 1,928,572 shares issued with no additional related expense booked.

On February 11 and 18, 2016, the Company granted a total of 403,333 stock options (the "Options") to three company employees. The options vest over periods of between 1 and 8 quarters and are exercisable at prices ranging from $0.01 to $0.40 per Share. The options were valued using the Black-Scholes model with 157% volatility and 0.56% discount rate for a total value of $400,914. Of this amount, $231,920 was expensed during the three-months ended March 31, 2016 and $48,711 during the three-months ended June 30, 2016.

On March 24, 2016, a convertible note payable was issued to GoldMed Ltd. The warrants were valued at a fair value of $56,030. The note included a beneficial conversion feature which resulted in a $75,000 discount recorded as a reduction of debt and an increase to additional paid in capital.

On April 5, 2016, the Company issued 150,000 shares to one service provider for services valued at $105,000 based on the Company's stock price of $0.70 per share on the date of issuance.

On May 10, 2016, the Company issued 41,667 shares to one service provider for services valued at $72,911 based on the Company's stock price of $1.75 per share on the date of issuance.

On May 18, 2016, the Company issued 150,000 shares to one service provider for services valued at $102,000 based on the Company's stock price of $0.68 per share on the date of issuance.

On June 28, 2016, the Company issued 175,000 shares to one service provider for services valued at $122,500 based on the Company's stock price of $0.70 per share on the date of issuance.

On June 30, 2016, the Company issued 333,333 shares to one service provider for services valued at $226,666 based on the Company's stock price of $0.68 per share on the date of issuance.

On June 6, 2016, a convertible note payable was issued to Alpha Capital, which note has a maturity date of June 19, 2017. The attached warrants were valued at a fair value of $440,000. The note included a beneficial conversion feature which resulted in a $300,000 discount recorded as a reduction of debt and an increase to additional paid in capital.

On April 11, 2016, a convertible note payable was issued to Maz Partner. The attached warrants were valued at a fair value of $80,000. The note included a beneficial conversion feature which resulted in a $46,000 discount recorded as a reduction of debt and an increase to additional paid in capital.

On June 30, 2016, a convertible note payable was issued to Ilan Malka. The attached warrants were valued at a fair value of $40,000. The note included a beneficial conversion feature which resulted in a $35,000 discount recorded as a reduction of debt and an increase to additional paid in capital.

On April 14, 2016, the Company granted a total of 450,000 stock options (the "Options") to one Company director. The options vest over periods of between 1 and 3 quarters and are exercisable at $0.60 per share. The options were valued using the Black-Scholes model with 233% volatility and 0.56% discount rate for a total value of $268,839. The Company expensed $89,613 during the three-months ended June 30, 2016 related to these options.

Note 3. Related Party Transactions

On July 16, 2015 5 Emerald debt holders in amount of $87,910 converted their debt into 274,719 units at a conversion price of $0.32 per unit, each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The Loss on Settlement of Debt recorded was $678,027.

On July 14, 2015 the Company issued Emerald's CEO and founder, Lior Wayn, 5,474,545 shares as per the share purchase agreement valued at $877,380, valued on the date of grant for the price of common stock.

The company's CEO, Lior Wayn was owed $3,310 and $3,480 payable as of June 30, 2016 and December 31, 2015, respectively.

Following Closing of the reverse merger, $490,000 loan from Zaxis International Inc. to Emerald Medical Applications Ltd. was rendered an intercompany loan and as such was written off.

On February 18, 2016, the Company issued 1,195,000 shares to three acting directors, for services valued at a total value of $1,194,403, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com.

Note 4. Employee Payable.

For the periods ended June 30, 2016 and December 31, 2015 the Company had $25,867 and $25,612, respectively, in employee payable related to the monthly wages payable to the company's employees.

Note 5. Notes Payable.

Convertible Notes Payable

On March 24, 2016, the Company issued a convertible promissory note to GoldMed Ltd. in the amount of $75,000. The Convertible Note is convertible to 187,500 units at $0.40 (the "Units"), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 months. Since the market price on the date of issuance was higher than the conversion price, a beneficial conversion feature was calculated at $78,750, but only $75,000 was recorded. $20,137 was recorded as amortization expense of for the period ending June 30, 2016, compared to amortization expense of $0 as of December 31, 2015.

On June 20, 2016, a $400,000 convertible note payable due on June 19, 2017, and Class A and Class B warrants exercisable at $0.80 per share with a term of 24 months were issued to Alpha Capital. The note included a beneficial conversion feature which resulted in a $300,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The Company recorded an amortization expense of $8,219 related to this note.

On March 31, 2016, a $80,000 convertible note payable and 200,000 warrants exercisable at $0.80 per share with a term of 24 months was issued to Maz Partner. The note included a beneficial conversion feature which resulted in a $46,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The Company recorded an amortization expense of $11,468 related to this note.

On May 24, 2016, a convertible note payable was issued to Ilan Malka. The note included a beneficial conversion feature which resulted in a $35,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The Company recorded an amortization expense of $3,548 related to this note.

Note 6. Payable - Not Convertible

On July 8, 2014 the company issued a convertible promissory note to Axel Springer Plug & Play Accelerator GmbH (the "Holder"), in the amounts of $29,719. The Convertible Notes are convertible at the lessor of a market based discounted and a fixed rate derived from a fixed market cap. The Holders have the right following the Date of Issuance, and until any time until the convertible Promissory Note is fully paid, to convert any outstanding and unpaid principal portion of the Convertible Promissory Note, and accrued interest, into fully paid and non-assessable shares of Common Stock. Holder was not issued warrants with the Convertible Promissory Note.

As of December 31, 2015 this note is no longer convertible since pursuant to the loan agreement the in the event that prior to December 31,2015 (the "Maturity Date"), the Company shall consummate a financing round led by unaffiliated investors in the amount of at least Euro 200,000, at a Company pre-money valuation on a fully diluted basis of at least Euro 750,000 (a "Qualified Round"), the Holder shall be entitled (but not obligated) to convert the entire loan amount into the most senior class of shares of the Company issued in such Qualified Round, based on a price per share equal to the lower of the price per share reflected by a Company pre-money valuation on a fully diluted basis calculated at the time of conversion equal to Euro 1,500,000; or - price per share which reflects a 20% discount on the lowest price per share issued pursuant to such Qualified Round. If upon the occurrence of such event the note holder elects not to convert upon receiving notice of such event, then the loan becomes non-convertible.

On January 14 and 16, 2015, we issued two promissory notes in the amount of $15,000 each to two different unaffiliated party in consideration for cash transferred to the Company (the "January 2015 Notes"). The January 2015 Notes bears interest at the rate of 1% per annum, are due and payable on January 14 and 16, 2016 and are not convertible to common stock.

One of the notes was repaid in full on March 3, 2015 with interest due waived the by the debtor, and the second note was repaid on April 22, 2015 with interest due waived the by the debtor.

During the second quarter of 2015, an agreement was reached with the holder of $120,979 advance payable note to settle the full amount due for $30,000 and interest due. The settlement with all note holders resulted in $528 loss on debt settlement due to the payment being higher than principal and accrued interest as of that date as well as a charge of $90,979 considered a contribution of capital due to the fact that note holder, IMWT, was a related party.

We concluded that these notes have a stated rate of interest that is different from the rate of interest that is appropriate for this type of debt at the date of the transaction. Accordingly, the company imputed interest at an appropriate rate estimated at 8% as prescribed under FASB ASC 835. The resultant charge of $6,280 for the period ending December 31, 2014 and $4,113 for the period ending March 31, 2015 to interest expense was considered a contribution of capital and was recorded in additional paid in capital.

On November 16, 2014 four individuals loaned amount to company, totaling $87,910 with maturity dates of November 16, 2015 and bearing an interest rate of 8% per annum, these notes were fully converted on July 16, 2015 to Company shares of commons stock and warrants as described in Note 3.

On March 9, 2016 four individuals lent the company a total of $34,547 with maturity dates of November 16, 2015 and bearing an interest rate of 8% per annum. As of June 30, 2016, the loan was fully repaid.

For the periods ended June 30, 2016 and December 31, 2015, the Company has recognized $21,420 and $19,285, respectively, in accrued interest expense related to the stated interest rate on the notes. Interest expense for the periods ended June 30, 2016 and June 30, 2015, respectively, were $21,887 and $11,829, as well as $43,372 and $0 from the amortization of debt discount.

Note 7. Commitments and Contingencies

The Company received research and development grants from the State of Israel according to guidelines and procedures of the Office of the Chief Scientist of the Ministry of Industry and Trade. According to the agreement, the Company is obliged to pay royalties on the sale of products developed with the participation of the Chief Scientist. The royalty rate is 3.5% and the total royalties will not exceed the amount of the grants. As of June 30, 2016, the Company had an outstanding contingent liability to pay royalties in the amount of $186,335, with $15,795 in accrued interest.

Note 8. Derivative Liabilities

On July 8, 2014 the company issued a convertible promissory note to Axel Springer Plug & Play Accelerator GmbH (the "Holder"), in the amounts of $29,719.

The Convertible note is convertible at the lessor of a market based discounted and a fixed rate derived from a fixed market cap. The Holder has the right following the Date of Issuance, and until any time until the convertible Promissory Note is fully paid, to convert any outstanding and unpaid principal portion of the Convertible Promissory Note, and accrued interest, into fully paid and non-assessable shares of Common Stock. The Holder was not issued warrants with the Convertible Promissory Note.

The following shows the changes in the derivative liability measured on a recurring basis for the six months ended June 30, 2016 and year ended December 31, 2015.

	Level 3
Derivative Liability at December 31, 2014	$	20,532
Extinguishment of Derivative Liability		(20,532)
Derivative Liability at December 31, 2015	$	-
Derivative Liability at June 30, 2016	$	-

For the periods ended June 30, 2016 and December 31, 2015 the Company has recognized $0 and $2,013, respectively, in accrued interest expense related to the stated interest rate on the notes. Interest expense for the periods ended June 30, 2016 and December 31, 2015, respectively, were $21,887 and $30,604, of which $0 and $0 is from the amortization of debt discount related to this note The note is no longer considered convertible since the lender elected not to convert, and as such the derivative was written off.

As of December 31, 2015 the company has a $0 derivative liability and a $29,719 convertible note payable, net of discount of $0. As of June 30, 2016, the Company has $0 derivative liability and $222,377 of convertible notes payable, net of discount of $412,628.

In accordance to ASC #815, Accounting for Derivative Instruments and Hedging Activities, we evaluated the holder's non-detachable conversion right provision and liquidated damages clause, contained in the terms governing the Note to determine whether the features qualify as an embedded derivative instruments at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted for as derivative financial instruments. Additionally, since the conversion price of the two notes represented the fair market value of the Company's common stock at the time of issuance, no beneficial conversion feature exists. We believe that the Company's shares of common stock is and have been very thinly traded during the last 3 years and that the fair value of the stock price was deemed not to be a fair value. Management decided that because the Company's ability to continue as a going concern was in question and that it has no revenue sources that the conversion price was a better measure of fair market value. Based on that decision, no beneficial conversion feature was reflected in the financial statements and the $20,165 extinguishment of debt was reflected in the current period earnings and $0 extinguishment of debt was reflected in the current period earnings.

Note 9. Other Receivables

As of June 30, 2016 and December 31, 2015 the Company had other receivables of $8,212 and $25,797, respectively, which represent VAT refunds claimed resulting from excess VAT paid over VAT received.

Note 10. Accounts Payable and Accrued Liabilities

As of June 30, 2016 and December 31, 2015, the Company had Accounts payable and accrued liabilities of $48,204 and $90,705, respectively.

Note 11. Subsequent Events

On August 4, 2016, 31,250 shares were issued to one service provider as per the terms of the service agreement.

On July 7, 2016, Emerald entered in a Securities Purchase Agreement and a Registration Rights Agreement with Firstfire Global Opportunities Fund LLC, a New York limited liability company (hereinafter "Firstfire"), pursuant to which the Registrant has issued and sold to Firstfire a secured convertible note bearing interest at 8% per annum in the principal amount of $100,000 with a maturity date on June 19, 2017 (the "Note"). In connection with the Securities Purchase Agreement, the Registrant also granted Firstfire 250,000 Class A and 250,000 Class B Warrants.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS Back to Table of Contents

Overview

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which refer to future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Plan of Operations

We are a digital health startup company engaged in the development, sale and service of imaging solutions utilizing our proprietary DermaCompare software that we developed for use in derma imaging and analytics (our "DermaCompare" or "Product"). In our development of the DermaCompare technology, we utilized the knowledge learned from advanced military image processing and data analytics to improve the analysis of medical images for the benefit of patients and the medical community. We believe that our proprietary DermaCompare software represents an advancement in skin cancer screening that should enable physicians to more readily identify and monitor changes in their patients' skin characteristics.

DermaCompare is Emerald's first application of its technology, which we believe represents an advance in the early detection of skin cancer. DermaCompare is based on automated image analytics software using advanced algorithms for alignment, anchoring, identifying and detecting changes in the shapes, colors and sizes of skin lesions, which could potentially become Melanoma. We apply our DermaCompare technology in image capture, correction and intelligent data extraction in the market for derma imaging products.

Our DermaCompare solution allows dermatologists and other medical care professionals, using a set of 25 total body photography ("TBP"), to capture sets of skin lesion images with, among other devices, digital cameras, camera-equipped smart phones or tablets. These images are then transmitted online and are remotely analyzed by professionals using our DermaCompare software.

Our DermaCompare imaging software has 2 main modules:

● A SaaS cloud-based Dr. Module that can be launched on any desktop computer connected to the Internet; or

● Mobile APP for mass population uses can be installed on smart phones or tablets with iOS or Android operating systems.

Our future plans also contemplate the use of wearable computing and imaging devices such as Google glasses or other comparable devices.

Our sales and marketing plan, which has already commenced, is to sell licenses for our DermaCompare imaging software to: NHSs, HMOs, health insurance companies, hospitals and medical clinics through distributers, health care channel partners or directly through independent salespersons and/or web purchase to dermatologists and other physicians (GPs) that we expect to purchase licenses based on the number of potential numbers of patients.

In furtherance of our business plan, which has resulted in us becoming an operating company, we have entered into a series of agreements with unaffiliated third parties for the distribution of its DermaCompare Technology, as follows:

1. On August 12, 2013, Emerald entered into an exclusive distribution with Derma Italy Sri, organized under the laws of the Italy ("Derma Italy"), pursuant to which Derma Italy was granted exclusive distribution rights in Italy;
2. On December 1, 2013, Emerald entered into a distribution agreement with S. Bokhorst - Creatiekracht, organized under the laws of the Netherlands, pursuant to which S. Bokhorst was granted exclusive distribution in the Netherlands;
3. On February 6, 2014, Emerald entered into a distribution agreement with Medical Edge Pty Ltd, organized under the laws of Australia ("Medical Edge"), pursuant to which Medical Edge was granted exclusive distribution rights in the markets of Australia, New Zealand and Oceania;
4. On January 14, 2015, Emerald entered into a Project Agreement with Realize S.A. and Ubitech, entities engaged in IT related to medical technology in Greece, and MEDISP and MPUoP, academic and research institutes in Greece (collectively, the "Greek Partners"). Emerald and the Greek Partners anticipate imminent grants from the Office of Chief Scientist of the State of Israel and the General Secretariat for Research and Technology of Greece, respectively, the proceeds of which will be used for development of enhanced smartphone applications for diagnosis of early stage Melanoma. 

During the six months ended June 30, 2016, we raised $735,913 through the issuance of equity and debt and we may be expected to require up to an additional $1.5 million in capital during the next 12 months to fully implement our business plan and fund our operations. 

Results of Operations during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015

We have not generated any revenues during the three months ended June 30, 2016 and 2015.

Our general and administrative expenses increased to $969,216 for the three months ended June 30, 2016 as compared to $5,570 during the same period in the prior year. The significant increase was due to increased expenses relating to our new business activities as well as share-based compensation.

Our research and development expenses increased to $192,002 for the three months ended June 30, 2016 as compared to $237,095 during the same period in the prior year. The decrease was due to more focused research and development expenses related to our DermaCare product.

During the three-month period ended June 30, 2016 and 2015, we incurred a loss from operations of $1,161,218 and $242,665, respectively.

Interest expense increased to $14,128 for the three months ended June 30, 2016 as compared to $4,346 during the same period in the prior year due to increased loans.

Depreciation and amortization expense increased to $47,718 for the three months ended June 30, 2016 as compared to $0 during the same period in the prior year due to expenses related to beneficial conversion features of notes issued during the three months ended June 30, 2016.

We incurred other income of $28,587 during the three-month period ended June 30, 2016 as compared to $0 in the same period in the prior year.

We recorded a gain of $6,503 from currency adjustments during the three months ended June 30, 2016 as compared to a loss of $4,110 in the same period in the prior year.

During the three-month period ended June 30, 2016 and 2015 we incurred $1,187,974 and $251,121 in net loss, respectively.

Results of Operations during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015

We have not generated any revenues during the six months ended June 30, 2016 and 2015.

Our general and administrative expenses increased to $2,768,736 for the six months ended June 30, 2016 as compared to $174,391 during the same period in the prior year. The significant increase was due to increased expenses relating to our new business activities as well as share-based compensation.

Our research and development expenses increased to $295,350 for the six months ended June 30, 2016 as compared to $247,400 during the same period in the prior year. The increase during the six-month period was due to additional research and development expenses related to our DermaCare product.

During the six-month period ended June 30, 2016 and 2015, we incurred a loss from operations of $3,064,086 and $421,791, respectively.

Interest expense increased to $21,887 for the six months ended June 30, 2016 as compared to $11,829 during the same period in the prior year due to increased loans. We recorded $0 and $367 in expense related to a change in fair value of derivative during the six month period ended June 30, 2016 and 2015, respectively.

Depreciation and amortization expense increased to $51,665 for the six months ended June 30, 2016 as compared to $0 during the same period in the prior year due to expenses related to beneficial conversion features of notes issued during the six months ended June 30, 2016.

We incurred other income of $28,587 during the six-month period ended June 30, 2016 as compared to $0 in the same period in the prior year.

We recorded a gain of $20,847 from currency adjustments during the six months ended June 30, 2016 as compared to a gain of $1,808 in the same period in the prior year.

During the six-month period ended June 30, 2016 and 2015 we incurred $3,088,204 and $431,445 in net loss, respectively.

Liquidity and Capital Resources

Our balance sheet as of June 30, 2016 reflects current assets of $282,971 consisting of $274,759 in cash and $8,212 in other receivables. As of December 31, 2015, we had current assets of $141,246 consisting of cash of $115,449 and $25,797 in other receivables. We had fixed assets, net of $17,735, as of June 30, 2016 and $21,120 as of December 31, 2015.

As of June 30, 2016, we had total assets of $300,706 and total assets of $162,366 as of December 31, 2015.

As of June 30, 2016, we had total current liabilities of $534,390 consisting of $48,204 in accounts payable and accrued liabilities, $22,786 in employee payable, $3,081in employee payable to related party, $21,887 accrued interest payable, $216,055 in convertible notes payable and $222,377 in short term notes payable.

As of December 31, 2015, we have had total current liabilities of $288,775 consisting of $90,705 in accounts payable and accrued liabilities, $3,480 in accounts payable to related party, $25,612 employee payable, $19,285 in accrued interest, short-term note payable of $119,974 and $29,719 in convertible note payable.

We had negative working capital of $251,419 as of June 30, 2016 and a negative working capital $147,529 at December 31, 2015. Our total liabilities as of June 30, 2016 were $534,390 as compared to $288,775 at December 31, 2015.

During the period ended June 30, 2016, we had negative cash flow from operations of $536,741, which was the result of a net loss of $3,088,204, a decrease in accounts payable of $1,777 and a decrease in accrued expenses of $45,779 offset by $8,293 in depreciation expense, $43,373 in amortization expense, $2,074,736 in non-cash compensation related to the issuance of services, $455,032 related to options issued for services and $17,585 decrease in other receivables.

During the six months ended June 30, 2016, we acquired assets valued at $474 as compared to disposing assets valued at $25,317 in the same period in the prior year.

During the period ended June 30, 2016, we had cash flow from financing activities of $701,366, which was the result of $735,913 proceeds from borrowings offset by debt payments of $34,547.

During the period ended June 30, 2015, we had negative cash flow from operations of $431,725, which was the result of a net loss of $431,445 offset by depreciation expenses of $1,878, amortization of debt expenses of $4,399, a loss of a change in fair value of derivatives of $367, an amount due from related party of $6,443, an increase in other receivables of $25,689, a decrease in accounts payable of $2,577, an increase in accounts payable from related party of $1,087, employee payable of $23,800, an increase in other current liabilities of $14,202 and an increase in accrued expenses of $7,430.

During the period ended June 30, 2015, we had cash flow from financing activities of $531,798 consisting of debt issuance.

There are no limitations in the Company's certificate of incorporation on the Company's ability to borrow funds or raise funds through the issuance of restricted common stock to effect a business combination. The Company's limited resources and lack of having cash-generating business operations may make it difficult to borrow funds or raise capital. The Company's limitations to borrow funds or raise funds through the issuance of restricted capital stock required to effect or facilitate a business combination may have a material adverse effect on the Company's financial condition and future prospects, including the ability to complete a business combination. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business.

The Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern. Our independent auditors have unqualified audit opinion for the period ended December 31, 2015 with an explanatory paragraph on going concern.

In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company. Management believes that actions presently being taken to obtain additional equity financing will provide the opportunity to continue as a going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.

ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents

Evaluation of disclosure controls and procedures. As of June 30, 2016, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act).

Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2016. Management's assessment was based on criteria set forth in Internal Control - Integrated Framework (1992), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this assessment, management concluded that, as of June 30, 2016, our internal control over financial reporting was not effective, based upon those criteria, as a result of the identification of the material weaknesses described below.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Specifically, management identified the following control weaknesses: (i) the Company has not implemented measures that would prevent one individual from overriding the internal control system. (ii) The Company utilizes accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and/or can be adjusted so as not to provide an adequate audit trail of entries made in the accounting software.

Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. The Company does not believe that this control weakness has resulted in deficient financial reporting because the Chief Financial Officer and Chief Executive Officers are aware of their responsibilities under the SEC's reporting requirements and personally certify the financial reports.

Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS Back to Table of Contents

None.

ITEM 1A. RISK FACTORS Back to Table of Contents

See risk factors discussed in Part I, "Item 1. Description of Business, subheading Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents

During the three-month period ended June 30, 2016, the Company issued the following unregistered equity securities:

On April 5, 2016, the Company issued 150,000 shares to one service provider for services valued at $105,000 based on the Company's stock price of $0.70 per share on the date of issuance.

On May 10, 2016, the Company issued 41,667 shares to one service provider for services valued at $172,911 based on the Company's stock price of $1.75 per share on the date of issuance.

On May 18, 2016, the Company issued 150,000 shares to one service provider for services valued at $102,000 based on the Company's stock price of $0.68 per share on the date of issuance.

On June 28, 2016, the Company issued 175,000 shares to one service provider for services valued at $122,500 based on the Company's stock price of $0.70 per share on the date of issuance.

On June 30, 2016, the Company issued 333,333 shares to one service provider for services valued at $226,666 based on the Company's stock price of $0.68 per share on the date of issuance.

Share based payment transactions were accounted for in accordance with the requirements of ASC 505-50 Equity Based Payments to Non Employees. Paragraph 505-50-30-6 establishes that share-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The Company measured share-based payment transactions at the fair value of the shares issued at date of grant, the Company believes that the value of the shares is more reliably measurable.

The Company believes that the issuances and sale of the restricted shares were exempt from registration pursuant to Section 4(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. The recipients in each case represented their intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate restrictive legends are affixed to the stock certificates issued in such transactions. All recipients of restricted shares either received adequate information about the Company or had access, through employment, relation and/or business relationships with the Company to such information.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents

None.

ITEM 4. MINE SAFETY DISCLOSURE Back to Table of Contents

None.

ITEM 5. OTHER INFORMATION Back to Table of Contents

None.

ITEM 6. EXHIBITS Back to Table of Contents

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein.

Exhibit No.	Description
10.35	Option Agreement dated July 11, 2016 betweeen the Registrant and Alpha Capital Anstalt and Chi Squared Capital Inc., filed herewith.
31.1	Certification of CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.

EMERALD MEDICAL APPLICATIONS CORP.

By: /s/ Lior Wayn
Lior Wayn
Chief Executive Officer
(Principal Executive Officer)
Date: August 26, 2016

By: /s/ David Ben Naim
David Ben Naim
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Date: August 26, 2016

Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Yair Fudim
Yair Fudim
Chairman
Date: August 26, 2016

By: /s/ Lior Wayn
Lior Wayn
Director
Date: August 26, 2016